Medical bills can be outrageously high, and usually there’s a direct relationship between the unexpectedness of a procedure and its cost. Sometimes, no financial planning in the world can forestall unforeseen medical expenses. Yet if any medical debt ends up on your credit report, it can remain there for up to seven years — even after you’ve paid it in full. That’s why a large coalition of advocacy groups have written Senate leadership asking them to consider the Medical Debt Relief Act.
The Act, introduced by Senator Jeff Merkely of Oregon (and by Rep. Maxine Waters of California in the House), would require that any paid medical debt under $2,500 be removed from a credit report 45 days after it was paid.
The idea behind the legislation is that medical debt is generally not a good barometer of a consumer’s creditworthiness. If someone applying for a loan had an emergency appendicitis five years earlier when he was between jobs and could not immediately pay the full rack rate for the procedure, should his credit be scarred even after he has paid that bill and has no other indicators of being a credit risk?